Wednesday, December 17, 2008

Peak Oil Is Now History

The Peak Everything Year

For those who understand the overwhelming importance of fossil fuel depletion, the signal event of 2008 was without doubt the oil price spike that sent the cost of a barrel of crude rocketing to $147. Knock-on effects were as anticipated: the airline industry contracted, the auto industry went on life support, food prices jolted upward, and the overall economy went into reverse (more on that below). Due to all of these things, the demand for oil subsequently peaked and began to slide, which in turn caused the price to plummet, with no end currently in sight.

I am among several commentators who have gone on record as saying that July 2008 will turn out to have been the all-time record month for world petroleum production. With the price so high (in July), all producers were pumping flat out. And now, with the price so low, there is no incentive to make the required enormous investments in future productive capacity, so that when demand picks up again (and it may be a few years before that happens), new additions to supply will not be sufficient to overcome the capacity erosion that will have accumulated in the interim due to depletion and decline in existing oilfields. Say goodbye to Peak Oil: it's history now.

Fortunately, high oil prices during the early months of the year led to an explosion of Peak Oil awareness. There was an unprecedented frequency of discussion of the issue in the mainstream media, with T. Boone Pickens doing much of the heavy lifting, but also we saw the release of several film documentaries, along with dozens of radio and television interviews of Post Carbon Institute fellows and board members. Transition Initiatives sprang up in scores of towns and cities around the world, and more communities began to assess their vulnerability to future oil shocks.

The climate continued changing this year, with a new record set for the melting rate of the north polar ice cap. Even more ominously, plumes of methane were observed rising from thawing permafrost in Siberia, leading some researchers to speculate that at least one of several potential "doomsday" reinforcing global warming feedback loops has been triggered.

Negotiations over the treaty that will replace the Kyoto Protocol have begun. Environmental organizations are planning to spare no strategic option (including massive direct action campaigns) to press for maximum emissions reduction commitments from the world's nations, but the economic crisis will likely weigh heavily on the minds of world leaders, whose top priority is the futile quest for a return to growth.

Which brings us to the subject of that annoying economic collapse that everyone keeps talking about. The "slowdown," as our government officials like to call it, actually started in 2007 when housing prices weakened and mortgage-backed securities started tanking, but over the past six months the low hissing noise that wary commentators have attributed to a deflation of the debt-credit bubble has turned into a vaporizing explosion.

In a commentary a few weeks ago I opined that 2008 will eventually be seen to have been the last year of aggregate world economic growth (as currently defined). Ever. That's a big, nasty prediction to make, but somebody needs to be pointing out the obvious: economic growth is, almost by definition, something that can't go on forever on a finite planet, and things that can't go on forever cease at some definable point in time. Given Peak Oil, I think we can define that point as now.

On the bright side, we are very nearly at the end of the Bush Administration, and we have just seen a historic election in which hope triumphed over cynicism. Despite realistic concerns that the Obama team faces unmanageable economic and geopolitical crises left over from its predecessors, and that the new Cabinet consists of insiders who are unlikely to grasp the unprecedented nature of the circumstances facing us, or to propose the kinds of bold policies that are called for in a post-Peak era, nevertheless it is clearly a time to offer every possible encouragement and support to our articulate and optimistic President-Elect.